9.3.3 Investment Policies

In general, an investment policy serves as the foundation of a public agency’s investment goals and priorities. The investment of bond funds should be reflected in an investment policy that is reviewed annually and approved by a public agency’s legislative body. Public agencies that adopt investment policies demonstrate their commitment to the fiduciary care of public funds. With careful implementation of solid investment policies, public agencies can also ensure that legal and investment considerations relating to the proceeds of tax exempt bonds are appropriately applied. Policies can be helpful when roles and responsibilities for investing tax exempt bond proceeds are separated between treasury/debt management staff and investment portfolio managers/advisors. As described in the GFOA Best Practice – Investment and Management of Bonds Proceeds, adherence to policies can ensure that agencies meet legal and regulatory requirements, receive fair market value bids, and meet their own objectives for various uses of proceeds^.134

Resources are available to assist public agencies in developing or updating an investment policy. The Association of Public Treasurers of the United States and Canada offers an Investment Policy Program that provides public investors with guidance and technical assistance in developing a comprehensive written investment policy. The GFOA also has a sample investment policy available for purchase. The California Municipal Treasurers Association has sample investment policies that were certified through its Investment Policy Certification Program. Additional sources for recommended elements of an investment policy can be found in CDIAC’s California Public Fund Investment Primer and Investment Policy Reporting Practices: An Informational Guide.